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Blog

Forestry-Related Industry Performance: April 2015

May 21, 2015
Author: Joe Clark

Forestry-related industry performance for the latter part of March and the month of April remained largely unchanged over February data in both the manufacturing and non-manufacturing sectors.

Total industrial production (IP) decreased 0.6% (+2.0% YoY) in March, more than undoing February’s 0.1% gain. For 1Q2015 as a whole, IP declined at an annualized rate (AR) of 1.0%, the first quarterly decrease since 2Q2009. The 1Q2015 decline resulted from a 60% (AR) drop in oil and gas well drilling and servicing, and from a 1.2% decrease in manufacturing production. Performance of major sub-groups was as follows:

  • Manufacturing output moved up 0.1% for its first monthly gain since November.

  • Wood Products and Paper output dropped by 1.0% and 0.6%, respectively.

  • Construction IP fell 0.9%.

  • Consumer goods moved down 0.6%

Capacity at the all-industries and manufacturing levels moved higher (both by 0.2%) to 134.3% and 132.4% respectively, of 2007 outputs. Wood Products extended its ongoing upward trend (since July 2013) increasing by 0.4% to 118.0%. Paper, by contrast, contracted by 0.1% to another new low of 98.6% and paper capacity was 2.5% lower in March than a year earlier.

Capacity utilization (CU) for the industrial sector decreased 0.8% in March (to 78.4%), 1.7 percentage points below its 1972-2014 average. Wood Products CU slumped by 1.4% (to 68.2%, its lowest rate since December 2012) while Paper fell by 0.5% (to 82.0%).

 

Manufacturing and Non-Manufacturing Surveys

The Institute for Supply Management’s (ISM) monthly opinion survey indicated that growth of activity in the U.S. manufacturing sector was unchanged in April. The PMI registered 51.5%, the same reading as in March (Figure 2) and its lowest level since May 2013. (50% is the breakpoint between contraction and expansion.) The most apparent changes included increases in the new orders, exports and imports sub-indexes and contraction in employment (Table 3).

ISM_April_2015

Wood Products expanded in April due to new and backlogged orders, which seems at odds with the lumber futures market in which the May contract dropped by over 6% during April. Paper Products also expanded with support from new and backlogged orders, production and exports.

Performance_April_2015

The pace of growth in the non-manufacturing sector quickened in April. The NMI registered 57.8%, 1.3 percentage points above the March reading of 56.5%. The business activity sub-index rose noticeably, and new orders slightly less so. However, exports contracted (collapsing from 59 to 48.5%) and import growth markedly slowed.

Forest2Market's Economic Outlook

 

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